According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, starts of buildings with five or more units declined by 12.6 percent at a seasonally adjusted annual rate in April 2018 to 374,000, after a 15.1 percent increase in March. On a year-over-year basis, the April starts of five or more unit buildings were 19.1 percent above its April 2017 level.
NAHB’s Multifamily Production Index (MPI) remained at 53 in the first quarter of 2018. The MPI measures builder and developer sentiment about current conditions in the multifamily market on a scale of 0 to 100. The index is scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
CPI vs. Rent:
The headline Consumer Price Index (CPI) rose by 0.2 percent in April on a seasonally adjusted basis, after a 0.1 percent decrease in March. Over the month of April, the Energy Price Index increased by 1.4 percent, after a 2.8 percent decrease in March, and food prices rose by 0.3 percent. Excluding historically volatile food and energy prices, “core” CPI rose by 0.1 percent, slightly slower than the 0.2 percent increase in March. Shelter prices, which are the largest consumer expenditure category, grew by 0.3 percent as rental prices, a component of the shelter index, grew by 0.4 percent in April. Since the increase in rental prices exceeded the growth rate in overall inflation, as measured by core-CPI, then NAHB’s Real Rent Index rose over the month of April, increasing by 0.3 percent. Over the past year, NAHB’s Real Rent Index has risen by 1.5 percent.
Existing Condo Sales and Prices:
Sales of existing condominiums and cooperatives rose by 1.6 percent at a seasonally adjusted annual rate to 620,000 units in April. Regionally, sales in the Northeast and Midwest decreased by 9.1 percent and 11.1 percent, respectively, while sales in the South and West increased by 7.4 percent and 7.1 percent, respectively. The months’ supply of homes increased to 4.1 months in April, from 3.8 months in March. Median prices on condos and co-ops nationwide rose by 3.4 percent over the past year to $242,500 in April. Median prices increased in the Northeast by 4.9 percent, Midwest (1.9%), South (1.6%) and West (5.7%).
The price of inputs to construction industries rose by 6.1 percent on a not seasonally adjusted basis over the past 12 months ending in April. This component of the Producer Price Index is composed of the price of inputs to new construction and the price of maintenance and repairs. Over the past year, the price of inputs to new construction increased by 6 percent, new non-residential construction (5.7%) and new residential construction (6%). The price of maintenance and repairs construction grew by 6 percent and both the price of inputs to non-residential maintenance and repairs and the price of inputs to residential maintenance rose by 6.2 percent, over the past year. Meanwhile, the price of oriented strand board (OSB) rose by 11 percent, cement (1.3%), Gypsum (7.5%) and softwood plywood (26.2%) over the past 12 months.
Jing Fu, Ph.D. is a Senior Economist at NAHB. She monitors developments in the economy to identify trends and issues related to the housing industry. She also assists in forecasting and analyzing the state and metropolitan area housing market, producing research and articles detailing sectors and the geography of the home building industry. Prior to joining NAHB, Jing worked at Thomson Reuters as a data specialist and has extensive knowledge and experience on quantitative research and large data set analysis. She holds an M.A. and Ph.D. in Economics from the University of Kansas.